"The lack of monsoon rains has affected India, for which agriculture still forms a substantial part of the economy. Additionally, the more cautious investor sentiment globally has seen potential investors become more critical of India's policy and infrastructure shortcomings," S&P said in a press statement.

Prior to S&P, rating agency Crisil too had slashed its forecast for India's GDP growth to 5.5% from 6.5% for this fiscal. After eight successive quarterly decline, India's GDP for April-June quarter grew at 5.5% against 5.3% during the previous quarter.

S&P has also cut China’s GDP growth forecast to 7.5% and that of rest of Asia.

"We have lowered our base case forecasts of 2012 real GDP growth by about half a percentage point for China to 7.5%; Japan to 2%; Korea (Republic of) to
2.5%; Singapore (Republic of) to 2.1%; and Taiwan to 1.9%," said S&P credit analyst Andrew Palmer.

Last week, the Indian government allowed foreign airlines to invest up to 49% in local ventures and multi-brand retailers like Walmart to invest up to 51 percent in local stores.

"The lack of monsoon rains has affected India, for which agriculture still forms a substantial part of the economy. Additionally, the more cautious investor sentiment globally has seen potential investors become more critical of India\'s policy and infrastructure shortcomings," S&P said in a press statement.

Prior to S&P, rating agency Crisil too had slashed its forecast for India\'s GDP growth to 5.5% from 6.5% for this fiscal. After eight successive quarterly decline, India\'s GDP for April-June quarter grew at 5.5% against 5.3% during the previous quarter.

S&P has also cut China’s GDP growth forecast to 7.5% and that of rest of Asia.

"We have lowered our base case forecasts of 2012 real GDP growth by about half a percentage point for China to 7.5%; Japan to 2%; Korea (Republic of) to
2.5%; Singapore (Republic of) to 2.1%; and Taiwan to 1.9%," said S&P credit analyst Andrew Palmer.

Last week, the Indian government allowed foreign airlines to invest up to 49% in local ventures and multi-brand retailers like Walmart to invest up to 51 percent in local stores.